Evaluating the impact of vertical integration on health system peformance

Vertical integration is grounded in economic theory as a corporate strategy for reducing cost and enhancing efficiency. There were three purposes for this dissertation. The first was to describe and understand vertical integration theory. The review of the economic theory established vertical integration as a corporate cost reduction strategy in response to environmental, structural and performance dimensions of the market. The second purpose was to examine vertical integration in the context of the health care industry, which has greater complexity, higher instability, and more unstable demand than other industries, although many of the same dimensions of the market supported a vertical integration strategy. Evidence on the performance of health systems after integration revealed mixed results. Because the market continues to be turbulent, hybrid non-owned integration in the form of alliances have increased to over 40% of urban hospitals. The third purpose of the study was to examine the application of vertical integration in health care and evaluate the effects. The case studied was an alliance formed between a community hospital and a tertiary medical center to facilitate vertical integration of oncology services while maintaining effectiveness and preserving access. The economic benefits for 1934 patients were evaluated in the delivery system before and after integration with a more detailed economic analysis of breast, lung, colon/rectal, and non-malignant cases. A regression analysis confirmed the relationship between the independent variables of age, sex, location of services, race, stage of disease, and diagnosis, and the dependent variable, cost. The results of the basic regression model, as well as the regression with first-order interaction terms, were statistically significant. The study shows that vertical integration at an intermediate health care system level has economic benefits. If the pre-integration oncology group had been treated in the post-integration model, the expected cost savings from integration would be 31.5%. Quality indicators used were access to health care services and research treatment protocols, and access was preserved in the integrated model. Using survival as a direct quality outcome measure, the survival of lung cancer patients was statistically the same before and after integration. ^

Corporate decision-making: A case study of decision support systems and financial performance in health care organizations

The purpose of this study was twofold: (1) To describe the relation of the intensity of DSS implementation to financial performance as an empirical exploration of improved performance at the organizational level. (2) To describe the relation of the intensity of DSS implementation to the type of organizational decision culture. A multiple case study design was utilized to compare three groups of paired cases. A pattern matching strategy was applied in this study. Four predictions were specified and compared to the empirical data. A progressively upward trend in the scores was predicted for the following theoretical relationships. (1) The greater the number of DSSs, the higher the sophistication index. (2) The greater the number of DSSs, the higher the financial ratios. (3) The greater the number of DSSs, the higher the culture score. (4) The higher the culture score, the higher the financial ratios. The data did not support any of the predicted trends except the relation between the number of DSSs and the financial ratios. The Income/Revenue ratio indicates the efficiency of a company's operations. One would expect that this ratio would be most affected by the operational and financial decision support systems. The majority of the systems measured in the study supported decisions tangential to the patient service areas. The evidence suggested that the type and number of decision support systems affects the bottom line. ^